NEW YORK ( TheStreet) -- Don Dion posts his current insights on the stock, bond, commodity and currency markets in his RealMoney blog, anticipating which ETFs will be in play next. Among his blogs this week were the following, in which he wrote about developments in energy ETFs, Europe and Korea ETFs, and improving relations between Turkey and Armenia.
Breakout for Energy ETFs?
Posted 10/16/2009 2:56 p.m. EDT Gasoline inventories declined by 5.2 million barrels last week, while analysts had expected an increase. Crude oil inventories increased by 0.4 million barrels, but it was overshadowed by the big decline in gasoline and a smaller decline in distillates, which includes heating oil. Refinery utilization is down for maintenance and that could mean a few more weeks of inventory declines. Nevertheless, gasoline inventory is 15.4 million barrels above 2008 levels at this time, distillates are 48.6 million barrels above last year's levels, and crude oil inventories are 29.6 million barrels higher. Equity investors followed the pop in oil yesterday by pushing up the price of energy ETFs. Energy Select SPDR ( XLE) gained 2% to close at its highest level since October 2008. Shares of refiner Tesoro ( TSO) gained 8.6%, and Valero ( VLO) advanced 7.1%. iShares Dow Jones U.S. Oil & Gas Exploration & Production ( IEO) is the ETF with the largest exposure to TSO at 0.83%; it gained 1.9% yesterday. IEO also has the largest exposure to VLO, at 3.02%. We've seen natural gas, crude oil and now gasoline jump and plunge based on large, unexpected swings in inventories. It is partially due to economic data that provides a mixed picture of the economy, along with huge amounts of liquidity created by the Federal Reserve.
Investors in iShares Dow Jones US Oil & Gas Exploration & Production Index Fund saw new options become available this week, for the February 2015 expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the IEO options chain for the new February 2015 contracts and identified one put and one call contract of particular interest.
In trading on Monday, shares of the iShares US Oil & Gas Exploration & Production ETF entered into oversold territory, changing hands as low as $67.90 per share. We define oversold territory using the Relative Strength Index, or RSI, which is a technical analysis indicator used to measure momentum on a scale of zero to 100.